'As long as the world continues to demand coal, Colombia will continue to be a supplier'

Colombia is the fifth largest exporter of coal with low ash content and low sulfur dioxide emissions.

The country has among Latin America’s largest proven reserves of anthracite coal and bituminous coal. This mineral is its second largest income source, after oil.

In this interview, the president coal producer association Fenalcarbón and former deputy minister of mines, Carlos Cante, highlighted the importance of coal for the economy.

He said the global energy transition will require coal, which Colombia can supply.

BNamericas: How to reconcile clean technologies to face climate change and coal production?

Cante: We are not large coal consumers; we are marginal consumers in the world. We do not consume more than 5Mt/y for energy generation in Colombia. Our energy matrix is extremely clean, almost 70% of electricity generation in the country depends on hydroelectric plants.

The challenge is that in the energy transition, the country knows how to recognize the need to have reliable backup energy, such as fossil fuels, including coal.

In the energy transition, the world will continue to demand coal. In this last half, in the face of the energy crisis, everyone has had to go out and look for backup generation sources because renewable energies could not guarantee at a reasonable cost the possibility of generating energy a production unit demands and to satisfy increasingly high global household demand.

The world has realized that a radical energy transition can create too many global problems. As long as there is potential demand for coal, Colombia can be an important supplier, even more so considering that Colombian coal is supremely efficient. It has higher quality than other coal for coke production.

As long as the world continues to demand coal, Colombia will continue to be a supplier.

BNamericas: What will happen to coal-producing regions when only clean energy is generated?

Cante: The possibilities for regional and national development that coal has guaranteed our country are not going to be easily replaced. There are some regions that basically depend on what happens with coal. Productive transformation does not happen overnight, and it demands an enormous amount of resources that our squalid tax system is unable to provide.

Colombia produces less than 0.6% of global emissions. Those who have to make an effort to incorporate technologies for cleaner combustion are developing or developed countries that continue to demand fossil fuels. The technologies exist, the possibilities exist and they have to be developed.

BNamericas: How is the coal market in Colombia doing?

Cante: We were already in a process of decreasing production on the north coast, where the coal mining [centers are], in César and La Guajira.

Our historical production of 90Mt began to decrease due to different circumstances, related to decisions of authorities that have not allowed the projects to be integrated, to advance, to develop new areas. There have also been decisions by investors to stop production, as in the case of Colombian Natural Resources (CNR) in 2020, or by the decision of Prodeco to return mining titles, which has complicated exportable production in the last two years.

However, it must be taken into account that in Colombia we not only export thermal coal, we also have metallurgical coal and we have a 60-year-old coking industry, which has been consolidating, growing, improving standards.

BNamericas: What are your projections for production this year?

Cante: Last year we closed with 3.4Mt and this year we aim to close above 3.8Mt of coke.

Colombia is a privileged country because it has the three types of metallurgical coals that are obtained in the world, and that means we can produce a metallurgical coke that is quite in demand. We are important suppliers of this product.

BNamericas Where are the main markets for metallurgical coke?

Cante: The main historical markets are Brazil and Mexico, but we have been increasing our capacity to reach India, the UK, Turkey and recently China and Finland.

Those are the main markets, but we are already reaching southeast Asia as there is a lot of demand for metallurgical coke.

BNamericas: And who are the main competitors?

Cante: China is the main producer and in turn the main world consumer of thermal coal, metallurgical coal, metallurgical coke. The fact that it has decided to stop imports of coal and coke from Australia generated a realignment in the global flows of these minerals, which has led to Australia placing coal in regions where countries such as Colombia traditionally [have operated].

If the US, which is thinking of also expanding its production capacity, begins to extract that coal, it will have a great influence in these countries where we are competing.

We are competing fundamentally with quality, and that is our advantage over competitors.

BNamericas: What are the prospects for next year?

Cante: In terms of prices, we expect them to remain relatively stable in a high range. Given the global demand for energy and the global demand for steel, we expect to maintain the production rate of both coal and metallurgical coke.

For next year I do not think there is an expectation of a greater production increase and neither in exports because it is going to be an electoral year [impacting] the decisions that have to be made so that production increases will remain for the next government.

BNamericas: What are those decisions?

Cante: There are fundamental decisions that have to do with the process of returning the areas by Glencore of the Prodeco project. The government and Glencore are going to delay negotiating this return, and then we will have to wait for the decision made by the government on how to offer those areas back to the market and under what conditions a new company will arrive.

The market will be very aware of these decisions.

It is very difficult to make forecasts because what happens and the electoral process will also have influence.

BNamericas: What message did Anla's decision to archive the environmental license for Quebradona send to the mining sector and investors?

Cante: It is a quite contradictory message from a government that during the mining congress in Cartagena said it supported the mining sector, that the country needed the development from mining and that we must bet on transition minerals, mainly copper. And then came the license archiving.

There is great confusion on the part of the Colombian mining sector. It is the second major decision against foreign investment and against mining development taken during this government, the first one having been the Minesa project archiving, Soto Norte in 2020.

Colombia’s mining sector is trying to raise standards in an impressive way. We are trying to bring the best technologies, the best developments, to guarantee the best studies, the best relationship with the community.

The standards we are implementing in most mining projects are world-class, but unfortunately, politics has permeated too much in the decisions of the technical authorities.

BNamericas: While AngloGold Ashanti will reapply, do you expect a significant delay of the project?

Cante: Yes. What the archiving legally means is that there are not enough technical elements to make a decision, and that means the company can develop more studies, redo more analysis and, of course, re-submit the application.

The question here relates to timing. In Colombia, there are no clear deadlines for responses by the licensing [authorities] and that is what greatly affects the possibility of investment.